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Advertiser Prominence Effects in Search Advertising

Author

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  • Przemys?aw Jeziorski

    (Haas School of Business, University of California, Berkeley, Berkeley, California 94720)

  • Sridhar Moorthy

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

Abstract

Search advertising is the ordered list of advertisements that appears when a user searches for something in an online search engine. By construction, these ads differ in prominence: ads higher up the list are more prominent than ads lower down the list. However, search ads also differ in prominence in another way: prominence of advertiser. This paper examines how these two types of prominence interact in determining the click-through rate (CTR) of these ads. Using individual-level click-stream data from Microsoft’s Live Search platform and measures of advertiser prominence from Alexa.com , we find that ad position and advertiser prominence are substitutes. Specifically, in searches for camera brands, a retailer not in the top 100 of Alexa rankings has a 30%–50% higher CTR in position 1 than in position 2, whereas a retailer in the top 100 of Alexa rankings has only a 0%–13% higher CTR for the same position improvement. Qualitatively similar results are obtained for several other search strings. These findings demonstrate, first, that advertiser brand matters even for search ads, and, second, the way it matters is the opposite of what is usually assumed in the theoretical literature on search advertising.

Suggested Citation

  • Przemys?aw Jeziorski & Sridhar Moorthy, 2018. "Advertiser Prominence Effects in Search Advertising," Management Science, INFORMS, vol. 64(3), pages 1365-1383, March.
    • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:3:p:1365-1383
    DOI: 10.1287/mnsc.2016.2677
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    6. Xiang Hui & Meng Liu, 2022. "Quality Certificates Alleviate Consumer Aversion to Sponsored Search Advertising," CESifo Working Paper Series 9886, CESifo.
    7. Suresh Muthulingam & Suvrat Dhanorkar & Charles J. Corbett, 2022. "Does Water Scarcity Affect Environmental Performance? Evidence from Manufacturing Facilities in Texas," Management Science, INFORMS, vol. 68(4), pages 2785-2805, April.
    8. Rafael P. Greminger, 2022. "Heterogeneous Position Effects and the Power of Rankings," Papers 2210.16408, arXiv.org, revised Dec 2023.
    9. Carsten D. Schultz, 2020. "The impact of ad positioning in search engine advertising: a multifaceted decision problem," Electronic Commerce Research, Springer, vol. 20(4), pages 945-968, December.
    10. Chen Jin & Luyi Yang & Kartik Hosanagar, 2019. "To Brush or Not to Brush: Product Rankings, Customer Search, and Fake Orders," Working Papers 19-02, NET Institute.

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